Assembly approves deal with Marriott

$44 million incentives pass despite questions

April 08, 1999|By Timothy B. Wheeler | Timothy B. Wheeler,SUN STAFF

Legislators are going ahead with up to $44 million in loans, grants and tax credits to keep Marriott International Inc.'s headquarters in Maryland, undeterred by evidence that the company did not disclose its decision to stay in the state a month before the deal was finalized.

By a vote of 105-26, the House of Delegates gave final approval yesterday to a bill that would give Marriott property tax credits of up to $2 million a year for 12 years, depending on whether the Fortune 500 hotel-management company expands its current headquarters in Bethesda or builds an new complex in Rockville.

The House bill was amended to mirror legislation passed by the Senate.

Meanwhile, the Legislative Policy Committee, made up of House and Senate leaders, is scheduled to meet today to approve giving Marriott $14.1 million to $15.2 million in loans from the state's Sunny Day Fund.

The actions -- fulfilling pledges announced March 11 -- come less than two weeks after The Sun revealed that Marriott executives had decided as early as Feb. 10 that they would not carry out their threat to move the company to Virginia.

Marriott executives asked Virginia officials to keep the decision secret as talks continued with Maryland over the incentives it was offering Marriott to stay.

The Sun obtained documents detailing contacts between Virginia economic development officials and Marriott executives through that state's Freedom of Information Act.

Marriott executives have denied that they attempted to hoodwink Maryland and Montgomery County officials. Company spokesmen say the firm did look seriously at moving its headquarters, making more than 100 contacts with Virginia officials.

Maryland lawmakers, who initially expressed dismay at The Sun's report, say they are satisfied that Marriott executives did not bamboozle the state.

"They did operate in good faith," said Del. Sheila E. Hixson, chairman of the Ways and Means Committee.

The Montgomery County Democrat, who is the chief sponsor of the tax credit bill, had called Marriott's behavior "outrageous" when she first read the Virginia records detailing how the company attempted to conceal its intentions.

Hixson said she feels better now because county and state officials involved in negotiations with Marriott told her the company did not exact any extra concessions by keeping mum about its decision to stay in Maryland.

"It wouldn't have made a difference," she said, had state officials known that Marriott had already dropped consideration of moving to Virginia.

Richard C. Mike Lewin, state secretary of business and economic development, said the state and Montgomery County actually reduced their offer to Marriott by $1 million during that final month of negotiations.

"We're quite proud of this package," Lewin said yesterday. When state officials presented their basic incentive package to Marriott executives Jan. 29, Lewin said, he sensed by the body language of the company officers that they had decided to accept the deal.

Some have criticized the Marriott deal as corporate welfare or blackmail, questioning why the state should help a company that reported profits of $390 million last year.

In addition to the tax breaks and loans, Marriott will get $3 million from the county and $1.1 million from the state for job training and will qualify for $700,000 in state job-creation tax breaks.

But Lewin and others insist that the deal is a good one for Maryland, given the economic and social value of Marriott. The average salary of the 3,500 headquarters employees is $67,000, and the company pays $20 million a year in state and local taxes.

The extra tax revenues the state will get from Marriott's new or expanded headquarters will repay what the state is giving the company now in 13 to 16 months, Lewin said.

Legislators did attach conditions to the tax credit legislation, reflecting at least some unease over the Marriott deal.

One set of amendments requires that a company actually build "new premises" in order to qualify for the tax breaks; that appears to be a response to reports that Marriott tried in vain to get tax breaks for its existing headquarters.

Another amendment, offered by Sen. Paul G. Pinsky, a Prince George's County Democrat, requires state officials to seek federal legislation or an agreement with other states to "prohibit or reduce corporate raiding by states of other states' corporations."

Lewin said he sees no problem with the changes, and he reiterated his own distaste for some aspects of the bidding wars in which Maryland and other states are engaged to attract and retain businesses.

"I'm against cash grants to corporations, but I can't unilaterally disarm," the economic development secretary said.

Even critics of the Marriott deal, such as Del. Leon G. Billings, kept their peace yesterday as the House approved the tax credit bill without debate. "Even though the state was a cuckold," said Billings, another Montgomery County Democrat, "the deal was cut, and a deal's a deal."